Investment Help, Personal Portfolio a Mess!
Investment Help, Personal Portfolio a Mess!
Hello, this is my first post. When I asked for advice on another finance forum, unanimously got redirected here. My husband (44) and I (40) are stable earners have been for a while and work in well paid professions but our personal portfolio is a mess. We are savers but don't invest the money for the fear of market tanking / timing the market, we both grew up in poverty and are scared, that's the best self analysis on why we just hoard cash. I'll give numbers below and please comment on what we can do to fix the under net worth situation.
We'd like to retire in 10 - 15 years and I worry we have shot those plans away by not investing majority of our money. I'd like to at least start now and fix the situation as best as I can, the thought of working longer than 10 years is enough motivation.
Combined Income - 520k
DH - Base - 240k, Bonus - 90k, 401k Match - 15k
Me - Base - 145, Bonus - 23, 401k Match - 8k
Expenses - 135k - 150k
We fund 401k fully, IRA (12k), 529 (16k - 3 kids), HSA - 7k
Net Worth Combined : 2.6 mil
401k - 760k
IRA - 50k
529 - 100k
Checking A/C - 675k + 350k (Just sold our home, we will need 200k for down payment for next home) = 1.25 mil
RSUs + Market - 250k
Real Estate Land (appreciation is not great, thinking of liquidating it but hoarding cash problem) - 300k
Should we get a financial advisor to help with investing or go with Vanguard 3 fund portfolio / any other ideas? And please dumb it down like you are teaching your 15 year old child
Thanks for reading and any help is appreciated!!
We'd like to retire in 10 - 15 years and I worry we have shot those plans away by not investing majority of our money. I'd like to at least start now and fix the situation as best as I can, the thought of working longer than 10 years is enough motivation.
Combined Income - 520k
DH - Base - 240k, Bonus - 90k, 401k Match - 15k
Me - Base - 145, Bonus - 23, 401k Match - 8k
Expenses - 135k - 150k
We fund 401k fully, IRA (12k), 529 (16k - 3 kids), HSA - 7k
Net Worth Combined : 2.6 mil
401k - 760k
IRA - 50k
529 - 100k
Checking A/C - 675k + 350k (Just sold our home, we will need 200k for down payment for next home) = 1.25 mil
RSUs + Market - 250k
Real Estate Land (appreciation is not great, thinking of liquidating it but hoarding cash problem) - 300k
Should we get a financial advisor to help with investing or go with Vanguard 3 fund portfolio / any other ideas? And please dumb it down like you are teaching your 15 year old child
Thanks for reading and any help is appreciated!!
Last edited by Vista22 on Tue Oct 26, 2021 2:04 pm, edited 1 time in total.
Re: Investment Help, Personal Portfolio a Mess!
At your age and time to hoped for retirement you might benefit from a planning tool like www.firecalc.com, the Fidelity planner, or one of many others.
If you were work with a lower cost advisor such as Vanguard PAS, planning is part of the process without costing you a lot nor exposing you to a predatory sales pitch.
But yes, holding only cash does not offer good prospects. The three fund approach is fine.
If you were work with a lower cost advisor such as Vanguard PAS, planning is part of the process without costing you a lot nor exposing you to a predatory sales pitch.
But yes, holding only cash does not offer good prospects. The three fund approach is fine.
Re: Investment Help, Personal Portfolio a Mess!
Is all of your savings in cash? If not, please edit your post to share what you are invested in, and in what amounts.
E.g.,
Total portfolio: $2.6m
Her 401k
5% Vanguard Total Market Stock Index (VTSAX)
25% Cash
His 401k
10% Vanguard S&P500 ETF (VOO)
15% cash
Etc.
E.g.,
Total portfolio: $2.6m
Her 401k
5% Vanguard Total Market Stock Index (VTSAX)
25% Cash
His 401k
10% Vanguard S&P500 ETF (VOO)
15% cash
Etc.
Re: Investment Help, Personal Portfolio a Mess!
Also, are your expenses inclusive or exclusive of funding your retirement accounts?
Re: Investment Help, Personal Portfolio a Mess!
Welcome to the forum.
This is apparently a long term and deep-seated issue. I'd suggest that you sign up with Vanguard's Personal Advisor Service and let them get your portfolio invested in a reasonable but conservative way. Be very honest with them about how you got to where you currently are.
I suggest Vanguard for 3 reasons.
This is apparently a long term and deep-seated issue. I'd suggest that you sign up with Vanguard's Personal Advisor Service and let them get your portfolio invested in a reasonable but conservative way. Be very honest with them about how you got to where you currently are.
I suggest Vanguard for 3 reasons.
- -they have no financial incentive to put you in anything but a very low cost and simple portfolio
-they only charge .30% - very low cost by industry standards
-their service can been considered "training wheels" - in a year or two, once you are accustomed to investing, if you want you can discontinue their service and do it on your own without moving the money or have to sell and make any changes in the portfolio
Last edited by retiredjg on Tue Oct 26, 2021 3:39 pm, edited 1 time in total.
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Re: Investment Help, Personal Portfolio a Mess!
Welcome to the forum!
Your aversion to losing money in the market is understandable. But to allow your retirement portfolio to keep up with inflation and last through your retirement, having at least 30-40% equities is safer than holding high levels of cash with low returns.
If your current cash is held in only one checking account, check to see if you have FDIC coverage on the entire balance. A joint checking account with no payable-on-death designations has a FDIC limit of $500k.
Low purchase limits but you and your spouse might want to purchase I-Bonds each year up to the annual limits with a portion of your cash.
Here is a BH wiki page about I-Bonds:
https://www.bogleheads.org/wiki/I_savings_bonds
Here is a current BH thread about I-Bonds:
viewtopic.php?f=10&t=346091
+1 to the Vanguard PAS suggestion. After a year or two it would be easy to migrate to a DIY 3-fund portfolio if you believe you have conquered your behavioral issue.
Your aversion to losing money in the market is understandable. But to allow your retirement portfolio to keep up with inflation and last through your retirement, having at least 30-40% equities is safer than holding high levels of cash with low returns.
If your current cash is held in only one checking account, check to see if you have FDIC coverage on the entire balance. A joint checking account with no payable-on-death designations has a FDIC limit of $500k.
Low purchase limits but you and your spouse might want to purchase I-Bonds each year up to the annual limits with a portion of your cash.
Here is a BH wiki page about I-Bonds:
https://www.bogleheads.org/wiki/I_savings_bonds
Here is a current BH thread about I-Bonds:
viewtopic.php?f=10&t=346091
+1 to the Vanguard PAS suggestion. After a year or two it would be easy to migrate to a DIY 3-fund portfolio if you believe you have conquered your behavioral issue.
- mrpotatoheadsays
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Re: Investment Help, Personal Portfolio a Mess!
The three-fund portfolio is simple, but it focuses on big company stocks - categorized as "large cap blend". Yes, people will tell you those Total Market funds hold medium and small company stocks, but the big company stocks are so big that they make the smaller companies irrelevant. To verify this claim, look at the performance of the S&P 500 index (500 stocks) versus the US Total Market fund (4000+ stocks); they are practically the same for every duration analyzed.
From 2000 to 2009, US large cap blend annualized nominal return was -0.9%. That means for a decade you actually lost money in US big companies. From 1970 to 2020, the maximum drawdown (i.e. how much it dipped in price) for US large cap blend was -51%. That means that on paper you lost half your money. So you need to determine how much pain you can stomach. This generally falls under the term "risk".
If you can't handle pain and refuse to take much risk, you may be able to reach your financial goals with nothing more than a mix of short-term, intermediate-term, regular and inflation-adjusted Treasury bond funds. But this means you have an overall financial plan with those financial goals clearly defined. To grasp this, you might want to talk to the 100% fiduciary advisors at Vestory. They will review your issues for free - for an hour. They will even management your portfolio to you (for a fee) and be able to provide a highly diversified portfolio away from decades of losses and huge drawdowns.
When it comes to financial advisors, probably 99% have their own best interests in mind - NOT YOURS! Only the small set of 24 hours a day, 100% fiduciary advisors are acceptable. Unfortunately, many advisors will lie and say they are 100% fiduciary. If they are selling you annuities (insurance products), high fee funds, loaded-funds or individual stocks, you need to run for the door.
Unfortunately, I don't have a single source for a good financial plan. I know Henry K. Hebeler wrote a good book called Getting Started in A Financially Secure Retirement: Pre- and Post-Retirement Planning in a Time of Great Uncertainty that had a great take on budgeting. It is quite old and I don't think it covers HSAs. His old website http://www.analyzenow.com/ has a spreadsheet for financial analysis taking in budget, investments, social security, pensions, etc and presents your growth and burn of money over time. The best investing advice comes from Paul Merriman, but it highly technical and many people fail to grasp it.
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Re: Investment Help, Personal Portfolio a Mess!
Did they raise their pricing? I thought it was 0.30% to use their PAS service.retiredjg wrote: ↑Tue Oct 26, 2021 2:13 pm Welcome to the forum.
This is apparently a long term and deep-seated issue. I'd suggest that you sign up with Vanguard's Personal Advisor Service and let them get your portfolio invested in a reasonable but conservative way. Be very honest with them about how you got to where you currently are.
I suggest Vanguard for 3 reasons.
- -they have no financial incentive to put you in anything but a very low cost and simple portfolio
-they only charge .35% - very low cost by industry standards
-their service can been considered "training wheels" - in a year or two, once you are accustomed to investing, if you want you can discontinue their service and do it on your own without moving the money or have to sell and make any changes in the portfolio
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Investment Help, Personal Portfolio a Mess!
Thanks. I'll fix it.Grt2bOutdoors wrote: ↑Tue Oct 26, 2021 3:30 pm Did they raise their pricing? I thought it was 0.30% to use their PAS service.
Link to Asking Portfolio Questions
- vanbogle59
- Posts: 1314
- Joined: Wed Mar 10, 2021 7:30 pm
Re: Investment Help, Personal Portfolio a Mess!
As a first approximation, to fund that lifestyle for 30+ years, you need a portfolio approaching $4M.
Currently looks like you have something like $1M.
So, between contributions and growth you need to come up with $3M in 15 years.
That can be done with a simple 3 fund portfolio.
Assuming the portfolio returns about 7% real (which would be pretty good), you need to contribute about 50K per year.
Of course, returns are neither guaranteed nor linear, but that's a reasonable ballpark.
Re: Investment Help, Personal Portfolio a Mess!
OP, what exactly is the "mess" you're trying to clean up? Do you have a variety of active funds--with high expense ratios--selected in your 401(k)s, IRAs, and other accounts? If so, look to shift your selections immediately to index funds, including VTSAX, VTIAX, and VBTLX. Why can't you just put your cash into a taxable brokerage account at your preferred asset allocation (maybe something like 60/40)?
You seem to have a solid savings rate. Yes, if I were you and looking for simplicity, I would sell the land you own. For whatever it's worth, I don't think you're in terrible shape.
You seem to have a solid savings rate. Yes, if I were you and looking for simplicity, I would sell the land you own. For whatever it's worth, I don't think you're in terrible shape.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Investment Help, Personal Portfolio a Mess!
OP, I whole heartedly agree with retiredjg. Get with Vanguard PAS and see how they allocate based on your preferences. Then after a period of time you can take over. This is exactly what I did, based on what I’ve learned here, and have been very happy with the results.retiredjg wrote: ↑Tue Oct 26, 2021 2:13 pm Welcome to the forum.
This is apparently a long term and deep-seated issue. I'd suggest that you sign up with Vanguard's Personal Advisor Service and let them get your portfolio invested in a reasonable but conservative way. Be very honest with them about how you got to where you currently are.
I suggest Vanguard for 3 reasons.
- -they have no financial incentive to put you in anything but a very low cost and simple portfolio
-they only charge .30% - very low cost by industry standards
-their service can been considered "training wheels" - in a year or two, once you are accustomed to investing, if you want you can discontinue their service and do it on your own without moving the money or have to sell and make any changes in the portfolio
If you’re smart enough to make that kind of income and save up that level of money, you’re smart enough to manage your portfolio yourself, after spending some time learning.
Re: Investment Help, Personal Portfolio a Mess!
Vista22,
The numbers do not add up.
A) Gross income = 520K
B) Annual savings = 19.5K X 2 = 39K + 16K + 12K+ 7K = 74K
C) Annual expense = 135K to 150K. Is this with or without mortgage and/or rent?
Gross Income = Annual expense + Annual savings + taxes
Taxes = gross income - annual expense - annual savings
= 520K - 150K - 74K
= 296K!!!
The numbers do not add up.
You can find out your last year taxes from your last year pay slips and tax filings.
<<Checking A/C - 675k + 350k (Just sold our home, we will need 200k for down payment for next home) = 1.25 mil>>
How much is the annual mortgage payment of the 1.25 million house?
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: Investment Help, Personal Portfolio a Mess!
The HSA and 401(k) contributions would reduce the OP's household income and the 401(k) matches wouldn't really be considered income, would they? That may bring the tax bill--which I'd guess, if the OP lives in a high-cost-of-living area, could be nearly 50%--down a bit.KlangFool wrote: ↑Tue Oct 26, 2021 4:15 pmVista22,
The numbers do not add up.
A) Gross income = 520K
B) Annual savings = 19.5K X 2 = 39K + 16K + 12K+ 7K = 74K
C) Annual expense = 135K to 150K. Is this with or without mortgage and/or rent?
Gross Income = Annual expense + Annual savings + taxes
Taxes = gross income - annual expense - annual savings
= 520K - 150K - 74K
= 296K!!!
The numbers do not add up.
You can find out your last year taxes from your last year pay slips and tax filings.
KlangFool
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Investment Help, Personal Portfolio a Mess!
Welcome to the forum.
Vista22 wrote: ↑Tue Oct 26, 2021 1:14 pm Hello, this is my first post. When I asked for advice on another finance forum, unanimously got redirected here. My husband (44) and I (40) are stable earners have been for a while and work in well paid professions but our personal portfolio is a mess. We are savers but don't invest the money for the fear of market tanking / timing the market, we both grew up in poverty and are scared, that's the best self analysis on why we just hoard cash.
Ok, but I guess you realize you probably need to take some risk to have enough for retirement. The "safe" withdrawal rate for retirement money is 4%. What you have so far in retirement assets looks like 810k, is that correct? You are showing 2 401ks, but only contributing to one.I'll give numbers below and please comment on what we can do to fix the under net worth situation.We fund 401k fully, IRA (12k)
We'd like to retire in 10 - 15 years and I worry we have shot those plans away by not investing majority of our money. I'd like to at least start now and fix the situation as best as I can, the thought of working longer than 10 years is enough motivation.
First thing you need to do is decide on asset allocation--
https://investor.vanguard.com/investing ... allocation
https://www.bogleheads.org/wiki/Asset_allocation
For risk averse investors, I suggest a target retirement fund or lifestrategy fund (Vanguard) instead of individual funds.
https://www.bogleheads.org/wiki/Target_date_funds
Note: Don't choose by year because these funds are pretty aggressive for the date. Instead, choose by desired asset allocation.
https://www.bogleheads.org/wiki/Vanguar ... tegy_Funds
Tax-managed balanced for taxable account
https://personal.vanguard.com/us/funds/ ... IntExt=INT
Combined Income - 520k
DH - Base - 240k, Bonus - 90k, 401k Match - 15k
Me - Base - 145, Bonus - 23, 401k Match - 8k
Should we get a financial advisor to help with investing or go with Vanguard 3 fund portfolio / any other ideas? And please dumb it down like you are teaching your 15 year old child
First, you can learn what you need right here, and if you get an advisor, you need to know enough to evaluate the advisor's advice. Most won't pass the Boglehead test.
This is outdated, but still valid
https://investingroadmap.wordpress.com/ ... n-advisor/
You can do it! You might be able to get comfortable with an asset allocation of 60/40 or even 50/50 for 5-6 years, but then you need to possibly reduce risk as you get close to needing your assets for living expenses.
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.